Question

What effects has it had on the US economy

What effects did the war in Iraq have on the US economy

Answer 1

The war increased the debt burden of US government as the war expenditure was funded by borrowing funds. Overall defence budgets increased substantially which led to increase in the budget deficit as expenditure was more than the revenue collection.

The government also had to spend on healthcare of the injured army men and other rehabilitational facilities which went up to $1 trillion. Plus the families who had injured members had to pay up for the additional costs and endured lost income.

The interest on the debt acquired during the war, also increased the future debt burden and the ability of the US government to spend on productive resources in the long run as most of their revenue was being spent on repaying the debt.

The economy suffered in terms of the opportunity cost of job creation. As every dollar which was spent on defense could have generated more number of jobs and increased demand in the economy in the long run, thereby impacting the economic growth rate.

Thus lost job generation, increase in government debt, increase in future interest payments, higher budget deficit and lost lives are the effects which the war had on the US economy.